Reforms Introduced By IRDAI To Provide Relief To Car Insurance Policyholders During The Coronavirus Lockdown
Ever since the pandemic-induced lockdowns have gripped the nation, businesses and individuals have struggled to cope with this unprecedented situation. With the economy slowing down, businesses remaining shut for a long time, and people barely leaving their homes, surviving this period took priority over anything else. According to some reports, around five million people lost their jobs in India, and countless more experienced salary cuts. Further, with social distancing being enforced by the authorities, people rarely ventured out of their homes over the last five months. Taking cognizance of this fact, the government took several measures to make this period less stressful for people.
Of the various measures taken, today, we are going to look at the reforms introduced by the Insurance Regulatory and Development Authority of India (IRDAI) to provide relief to motor car insurance policyholders during the lockdown.
Extension of the renewal date for third-party motor insurance
The first lockdown began on March 25, 2020. The IRDAI realized that since all offices were closed and not everyone was comfortable making online payments, it needed to provide relief to vehicle owners who wanted to get their vehicle insurance policies renewed. Hence, it decided to extend the renewal dates for third-party motor insurance policies. According to the IRDAI notification, all motor insurance policies expiring between March 25, 2020, and April 14, 2020, could be renewed till May 15, 2020, without any penalty or fine.
According to the Motor Vehicle Act, 1988, if any vehicle is found plying the roads without a third-party insurance policy, then the owner be levied a fine of up to Rs 2000 and/or face imprisonment of up to three months. With this notification, vehicle owners were allowed to drive their vehicles without a valid insurance policy until May 15, 2020.
However, with the extension period now over and multiple regions in the country ‘Unlocking’, it is essential that you complete your car insurance renewal before plying the vehicle on the roads. Leading insurance providers are offering seamless procedures for car insurance renewal online. Also, insurance companies have a grace period of up to 90 days after policy expiration, within which you can renew your lapsed insurance policy and retain your No Claim Bonus (NCB).
So, renew your policy online as soon as possible and continue to enjoy complete coverage and all the accrued benefits.
No change in third-party car insurance premium rates
The IRDAI regulates the premium rates for third-party vehicle insurance policies in the industry. Every year, it notifies insurers about the changed rates based on certain parameters. This year, with the automotive industry feeling the impact of the lockdown and experiencing a drop in sales that the industry has never seen before, the Society of Indian Automobile Manufacturers (SIAM) had requested IRDAI to not make any changes to the third-party motor insurance premium for the financial year 2020-21.
After deliberating, the IRDAI decided to keep the rates unchanged. This decision helped to avoid an increase in the cost of acquisition of a motor vehicle for the end customer. Hence, the automotive industry and subsequently, the motor insurance industry breathed a sigh of relief and hoped for sales to pick up again.
With the unlock process underway, people have started moving out of their homes for work and other activities. However, with social distancing being the new norm, most people are trying to avoid travelling by public transport and are preferring personal vehicles. In this landscape, the automotive industry is hoping to see an increase in sales. However, with millions of Indians losing their jobs over the last few months and millions of others working from home at lower salaries, people are not yet looking to buy costly vehicles. The focus is clearly on cost-efficiency. Hence, the IRDAI’s decision of not increasing third-party motor insurance premium came as a relief to the industry.
Summing Up
These are unprecedented times. The government is trying its best to help people get through this phase by announcing a series of relief measures and welfare packages. Also, there will be a lot of rumours going around. Before believing any of them, we recommend that you talk to your insurer and confirm them. With most states implementing unlock measures and trying to get the economy back on its feet, businesses have slowly started reopening, and people have started travelling locally. Before you take your car out, ensure that you renew your car insurance policy online or talk to your insurer about offline options that have started opening up. Good Luck!
